Making money with Android apps

Original Author: Betable Blog

Making money on Android can be hard. Many developers devote countless hours to building, testing, and marketing their apps only to fall short of that income-independent holy grail. We went through over 50 Android game & app postmortems and developer income reports to put together a list of common best practices and tactics that worked.

In-App Purchases versus Advertising

We are big proponents of freemium game design on our blog, so imagine our surprise when we found out how the majority of independent Android game developers make their living: ads!

As it turns out, implementing a fully baked freemium game design is rather difficult. You can’t simply tack on freemium monetization after the fact: you need to build the game for freemium monetization from the ground up, complete with appropriate gating and enticing in-app purchases. When faced with this daunting design challenge, most developers opt for in-game advertising instead. Even when they did implement in-app purchases, it typically accounted for less than 5% of their revenue.

But Betable, you say, won’t users hate having ads in their game? Yes, they will. However, what’s surprising is how few of them are willing to pay to get rid of them: we found that less than 1% of revenue typically comes from Paid, ad-free versions of Free apps. This may also be a function of the frequency of advertising in apps on the Android platform, but it’s still a very low number. This tells us that while users dislike ads, they dislike paying for apps more.

Use multiple ad providers

One of the key tips we found for maximizing ad revenue is to use a mix of small and large ad providers. Small ad providers have low fill rates, but pay you well for the ads that you show. Large ad providers can always fill your inventory, but typically have a significantly lower eCPM. A common strategy is to work with one or two small ad providers to fill as many spots as possible, and then let the large provider fill the remaining inventory. This is also very important because revenue from each provider can fluctuate wildly month-over-month, so diversifying your ad providers gives you some insulation against those changes.

For fun, we wanted to post the average eCPM and inventory fill rate from each popular Android ad provider below. These numbers should not be taken as gospel, but hopefully help:

Optimizing your ad placement is tricky business. You’ve got to eat, so you need to make money, but you’d also like do so in a way that doesn’t totally ruin the user experience. Taking equal inspiration from Johannes Borchardt, we’ll show you some potential optimizations and then you can decide which approach is right for you.

Option 1) Optimize for Visibility

With this method, you place your ad where users are most likely to see it, but not in the line-of-fire of gameplay. The goal here is to maximize the likelihood that a user sees the ad, is interested in it, and then clicks on the ad. This generates the highest quality clicks.

Option 2) Optimize for Clicks

With this method, you place the advertisement where users are most likely to click, whether it’s by accident or because the ads are in an area of the screen that is a focal point during gameplay. The goal here is to maximize the likelihood that a user clicks on an ad, period. This generates the most clicks but can lead to disgruntled users. Also, if done too intrusively, it can upset your advertisers.

Option 3) Optimize for Gameplay

With this method, you place the ads in non-gameplay screens such as the menu, the inventory screen, and others. The goal here is to leave gameplay intact to preserve the user experience. This method generates the least clicks, but is least likely to prompt complaints from your users.

When optimizing for gameplay, many developers opt for interstitial ads. These ads have the benefit of fitting well in between gameplay chunks, such as between turns in an asynchronous game or between levels in a puzzle game. These ads often pay well compared to banner ads and don’t intrude on your game’s immersion like banner ads.

Build multiple apps in different categories

This might be the most obvious tip here, but a developer with a diversified portfolio of multiple apps always outperforms the developer with one project. Other than the truism that you shouldn’t place all of your revenue eggs in one basket, there are a number of advantages to this approach. By building different games and apps for different audiences, you’re increasing your overall target audience. You’re also attacking different niches, which might be less competitive than your current target niche of app or game type. It’s very common for one game or app in your stable to generate the lion’s share of your revenue and impressions. You won’t know which app this is until you create it, but having a workhorse app can power your entire ecosystem with cross promotion.

Cross promote your other apps with House Ads

Admob and other services on Android give you the ability to cross-promote your apps using your own ad space. This is huge for growing your ecosystem, as you get to double-dip in revenue and impressions from your users. Furthermore, you can maximize the engagement of your existing audience by matching them with the right app. And perhaps most importantly, this gives you a ton of free marketing firepower for promoting your next project and extending your ecosystem further.

Conclusion: Build an ecosystem

To tie together the tips mentioned above, developers need to think of their entire user base as one ecosystem. Like Reddit or ICanHazCheezburger, mobile apps that cover diverse interests can build on each other around a central brand. Even though they cast wide nets, these sites are good examples because they can still narrow down their target audience to only a few key demographics. To figure this out for yourself, think about why your users use your apps or how they get value out of them. Do your users enjoy your dead-simple budgeting app? They might appreciate a dead-simple to-do list. Think about what type of person is using your most popular apps to identify opportunities for new apps. Maybe that user who loves your dead-simple budgeting app would play a stat-driven baseball sim? You won’t know until you try, but by thinking of your user base across all apps as a single ecosystem, you can identify which audience you have struck a chord with and continue to grow. And as your ecosystem grows, the downloads, impressions and revenue will follow.